The Energy Report 03/19/2020
Money is No object
The day after the price of oil crashed to an 18-year low, hope that the most a massive global stimulus-response may raise hopes of future demand in a world where demand has stopped. Oil price tested the critical psychological $20 a breed area after blowing through the old 2016 low like a knife through butter. With the Saudi’s still trying to bury global oil producers at a time when demand destruction is at an all-time high, it is going to take an all-out assault by global governments to save the economy and beat the coronavirus and get back to growth.
The world’s Three largest economies launched its money attack. The U.S. Senate passed a significant phase of its expected 1.3 trillion coronavirus bill freeing up billions of dollars to supply free virus testing, paid sick leave, and expanded safety-net spending in a bid to cushion the economic blow to Americans from the pandemic. The European Central Bank (ECB) also announced an $820 billion bond purchase program as well in what was Christine Lagarde’s “do whatever it takes moment” and the combination of stimulus is at least signaling that there will be economic life after we start picking up the pieces.
Now reports that China is set to unleash trillions of yuan of fiscal stimulus to revive an economy expected to shrink for the first time in four decades amid the coronavirus pandemic.
The Federal Reserve also did more by saying it would launch a new lending facility to backstop the money-market mutual-fund sector, according to the Wall Street Journal. The Fed is calling it the “Money Market Mutual Fund Liquidity Facility, and it will make loans available to eligible financial institutions backed by high-quality assets purchased by the institutions from money-market mutual funds.
Of course, will this save the oil industry? Unprecedented pain. Reports that producers from Canada to The North Sea are in danger of going bankrupt. While there are some signs that even the Saudi’s are feeling the pain, a report that Saudi Aramco is warning EU customers that bought their cheap oil may have to pay more to have it shipped, They put out a note that “DUE TO EXTRAORDINARY FREIGHT MARKET CONDITIONS” || ARAMCO SAYS “FREIGHT PROTECTION CALCULATION WILL BE LIMITED TO 10% OF SAUDI ARAMCO OFFICIAL SELLING PRICE.” Too bad they can’t ship it using Amazon prime.
There are signs of hope of an end date for the virus. The Wall Street Journal reported that China has no new domestic coronavirus infections for the first time since the outbreak surfaced, as countries around the world increasingly barricaded their national borders to tackle the pandemic.
Gas Prices are tanking! Record low price coming soon to a station near you.
While many people are feeling economic pain, help is on the way. Stay safe and keep the faith; we are already on our road to recovery.
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